Switch mortgage rates - and make it snappy

Homeowners sitting on a standard variable-rate mortgage should switch now, say brokers.
The City is braced for a new global economic crisis, meaning the current flood of cheap mortgage deals could soon disappear. Right now, swap rates - the cost of lending from one bank to another - are at a record low. But if, as expected, Greece defaults on its debt and the eurozone crisis deepens, rates will rise, banks will become much more reluctant to lend to one another, and mortgage availability could wither away.

That’s why the almost universal advice from the experts is for those with standard variable-rate (SVR) mortgages to make their move without delay.

So while low interest rates have meant low monthly repayments even for borrowers sitting on SVRs, brokers advise now is the time to move to a lifetime tracker or fixed-rate deal.

On the latter, Chelsea Building Society has the best offering, with a five-year fixed rate at 3.29 per cent. It’s only available to those with a 30 per cent minimum deposit. For a tracker mortgage, ING Direct and HSBC both currently have lifetime rates at Bank of England base rate plus 1.99 per cent.

With the current Bank rate, a borrower would be paying interest at 2.49 per cent. Both products require at least a 40 per cent deposit.

The good news is that, for now, availability is strong. The number of mortgage products on the market has risen to the highest level in three years, according to Moneyfacts, the comparison website. Mortgage broker Ray Boulger, at John Charcol, points out that many of the new products are from building societies, who tend to examine applications with a more personal, rather than computerised, approach. That could help borrowers who are self-employed or have other special situations to re-mortgage.

Another deal worth examining - particular for those worried about the slightly higher costs of fixing at the moment - is the “Golden Hello” mortgage from Accord. It’s a five-year, fixed-rate mortgage that charges base rate plus 1.69 per cent until November 2013. After then, the interest reverts to a fixed rate of 3.39 per cent for the following three years.

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